OBJECTIVES

Living Standards

1. Explore what is meant by living standards. Consider the relevance and importance of material and non-material SOL 

2. What are indicators for material SOL?  

3. What are Non-material indicators of SOL?  

4. Do we need one or both types of measures to assess Standard of living? 

5. Introduce Gini Co-efficient / Lorenz curve 

6. Consider alternative measures of ‘Living Standards”.  – Composite measures: HDI (Human Development Index); Quality of Life Index; SPI (Social Progress Index), OECD Better Life Index.  

7. Assess the strengths and weaknesses of indicators 

Living Standards

Living Standards refer to the level of wealth, comfort, material goods, and necessities available to a particular socioeconomic class or geographic area. Living standards are crucial for understanding the quality of life individuals or communities experience, which is often divided into material and non-material dimensions.

Material Standard of Living (SOL)

Material SOL refers to the tangible aspects and goods that enhance the quality of life. It measures the quantity and quality of goods and services occurring to each person in the country (Looks at the availability of G&S).

Examples include: income, housing and access to amenities.

Indicators for Material SOL

1. Income Levels - average income (per capita or household).

2. Employment Rates - high employment typically correlates with better living standards.

3. Economic Stability - inflation rates and economic growth.

4. Access to Basic Needs - food, clean water, shelter & healthcare.

5. Wealth Distribution - how wealth is spread across a population.

How is it assessed?

1 Extended response 3 questions, 4, 6 and 10

how does welfare system helping?

Statistics does not need to be known

Poverty - Housing

Housing has a significant impact upon investment, productivity and participation, as well as consumption and saving trends across the economy. Housing provides Australians shelter, safety, security and privacy. Affordable, sustainable and appropriate housing enables people to participate in the social, economical and environmental factors of society.

• Harder to overcome poverty if you don’t have housing

• Employment, education and health sectors are difficult to access

Housing security

Less people have homes fewer people have employment and more people have health issues - which affects the entire economy (more tax burden for public budgeting). The absence of affordable, secure and appropriate housing can have a number of negative consequences, including homelessness, poor health and lower rates of employment and education.

Homelessness

Includes those who sleep rough on the streets or under makeshift dwellings. Secondary homelessness can include individuals and families moving between temporary shelters, including houses of friends, family, and emergency accommodation. Living in private boarding houses without a private bathroom or security of tenure (not secure enough to know that you will be able to live there for extended period of time/permanency?) refers to tertiary homelessness.

People who are homeless are commonly unable to acquire and maintain regular, safe, secure and adequate housing due to an unsteady or lack of income.

!Homelessness and poverty are interrelated)! - Homelessness leads to hardships when searching for employment and unemployment leads to homelessness and poverty. It’s like an endless cycle of poverty RIP.

Do not need to know types of housing and income impacts

Employment

Underemployment refers to people of working age with part-time jobs when they would rather work full time, or with jobs that do not make full use of their skills and education (definition can be used for assessment).

Unemployment refers to people of working age who are actively looking for a job but who are not employed.

Discouraged workers/hidden unemployment - People who are looking for jobs for so long that they have given up on employment (not included in unemployment rate and reduces accuracy).

What can we do if we don’t have a job? !Don’t need to know but is helpful for life lmao!

• Job Seeker - Prove that you are actively seeking for work

• Centrelink - i have no idea

• Rental benefits

• Youth allowance

Case Study - Poverty in Australia

How is poverty defined in Australia by the Australian government?

Relative poverty is defined as lacking the resources required to participate in the lifestyle and consumption patterns enjoyed by others in society.

Poverty in Australia is regarded as fundamentally about a lack of access to the opportunities most people take for granted - food, shelter, income, jobs, education, health services, childcare, transport and safe places for living and recreation.

Is it defined differently by the Australian Bureau of statistics?

ACOSS and UNSW use two international poverty lines to measure poverty in Australia. People who receive below 50% and 60% median income are regarded as living in poverty.

Under poverty - relative and absolute poverty. You are not able to have access to the basic needs.

Identify the number of homeless people in each state, including information on each capital city.

Metropolitan people - Less homeless

Rural people - more homeless

Provide an explanation on how poverty levels have changed in Australia over the last 20 years.

The overall poverty rate in Australia wavered between 11.5% and 14.5% from 1999 to 2022. In 1999 poverty declined substantially from 13.1% to 11.5% in 2003. In the case of children poverty, within the last 20 years, it has moved to a higher band from 14.3% to 18.6%.

After the Global Financial Crisis in 2007-2008 poverty rose sharply to 14.4% and then following the 2009 Pension increase, it fell to 12.6%. Until 2017, poverty has been moderately increasing. Poverty among people in households relying mainly on Newstart Allowance rose from 61% in 1999 to 78% in 2015. The average poverty gap (for households reliant on Newstart Allowance below the poverty line) rose from $81 per week to $136 per week over the same period.

The transfer of 80,000 sole parents to Newstart Allowance in 2013 was associated with an increase in the rate of poverty among unemployed sole parents from 35% in 2013 to 59% two years later. Poverty rates have improved for older people, likely due to the impact of the increase in the Age Pension (dropped from 19-15%) and for Aboriginal and Torres Strait Islander people in urban and regional areas.

Covid - Homelessness spike(why? housing hella expensivo) less income becaues ofhte lockdowns. cost of living crisis (whats happening right now)

Changes to the economic conditions of Australia’s social security have been the main influences on levels of poverty.

Increase in Poverty

• Newstart and Youth Allowance

• Single parents

• Remote Aboriginal and Torres Strait Islander communities

Decrease in Poverty

• The 2009 Pension increase included $32 a week granted to the single rate of pensions.

• Ongoing indexation of pensions to wage

• From 33.9% in 2006 to 31.4% in 2016 for poverty rates in Aboriginal and Torres Strait Islander people. This is specifically for city and regional areas.

How many children are in poverty in Australia and what does it mean when we say, ‘Children in Australia are living in poverty?’ Short-term, long-term implications of a child living in poverty.

• 761,000 Children (16.6%) are living below the poverty line

• One in six children are living in poverty (2022 Poverty Australia Snapshot)

Short term

• Indirect exposure (witnessing or knowing of its occurrence) of violence.

• Stress,

• Social isolation and exclusion - lack of funds for things

• Access to district schools with fewer resources, less funding from local tax, less parental involvement, lower wage working hours, inadequate facilities, etc.

• Troubles in accessing food and basic necessities

Long term

• Higher odds of experiencing poor health problems as adults usch as heart disease, hypertension, stroke, obesity, certain cancers, and even a shorter life expectancy

• Mental health risk and mental illnesses that can impair overall academic achievement and the ability of children to succeed in school.

• Higher risk of problems with speech, learning, and/or emotional development.

• Social and behavioural issues

• Poor employment

What is the difference between poverty levels in different communities in Australia (Indigenous and non-indigenous)

Indigenous

• Relative poverty

• Note that the Poverty Inquiry was unable to document the poverty status of Aboriginal people on a national basis because of the deficiencies of the data collected on the incomes of Aboriginal households.

• Indigenous have higher statistics of unemployment and poverty compared to non-indigenous.

Non-Indigenous

• Only 5.5 percent of non-indigenous families are considered to by achieving 50% to 50% below median poverty line.

Define Poverty

ACOSS and UNSW use two international poverty lines to measure poverty in Australia. People who receive below 50% and 60% median income are regarded as living in poverty.

Outline the extent of poverty in Australia

One in eight people 13.4% and one in six children 16.6% lived below the poverty line. Over three million 3,319,000 people lived in poverty, including 761,000 children (2023 Australia).

1. Reasons for poverty in Australia 

• If there is limited access to work, then it will be hard to find a job and earn an income, meaning that you will not be able to afford everyday necessities and fall below the poverty line. There are other reasons such as not earning enough from a job / being underpaid. If you are also unable to work due to a health issue, then it restricts you from being able to get a job.

1. Explain the welfare system

• Welfare refers to the range of government programs that provide financial or other forms of aid to those who are struggling / cannot support themselves. 

1. Discuss the role of the welfare system in helping people who are impoverished

• Welfare systems are designed to assist people from a variety of backgrounds. They can assist new parents who need time off work or parents who need help with the cost of raising children. The welfare systems also can help people who need to leave their home due to crisis such as domestic violence, or those living with permanent disability.

Income Inequality

Income - flow of funds and accumulation of the funds with other assets become wealth

More income a household has the greater capacity for building wealth over time.

Income VS Wealth? - flow vs accumulation of flow

Income

Most households have more than one source of private income (wages, salaries, investment, pension etc.)

Gross income is determined by adding any transfers a household receives from government (e.g. pension). Direct are deducted to determine disposable income. Most households also receive some form of indirect benefit (social transfers) such as assistance with school frees or healthcare costs, which add to final income.

/3Private Income

Market income (Priv Income) can be earned from work, known as earned income, or from selling other household resources, known as unearned income.

Unearned income can be, for example, in the form of rent, interest or dividends. (private ownership of assets earning you an income)

Minimum Wage and Transfers

Some peoples pay is influenced by minimum wages or awards rather than by free negotiations between employer and employ. Fair Pay Australia (every financial year there is a little change) sets minimum wage.

Eligible people may receive transfers from the government, e.g. pension or benefits (only if unemployed, over pension age, or have young families).

Gross income is income after an allowance for transfers. Households pay income tax on their gross income. The income that remains after payment of direct tax is known as disposable income. The Australian income tax is progressive, meaning that people on higher incomes are taxed at a proportionately higher rate than people on low incomes.

Social Wages

The final purchasing power or value of households income is subject to two further adjustments

1. The government provides a number of things at no or low cost to households, for example government schooling, healthcare, through Medicare, use of most roads, libraries and so on. (Healthier, more productive and more educated labor force, increasing taxation revenues for the future - divident smth??) The value of these products can be considered to be a form of social wage in effect raises the purchasing power of peoples disposable incomes.

2. Indirect Taxes - the government can collect revenue like GST and excise duty. These taxes are levied when people spend money or undertake certain activities (Indirect taxes reduce the purchasing power of disposable incomes).

Progressive Taxation vs Indirect taxes - Regressive taxes (burden is more on low income earners and is bad for income distribution)

Wealth

The current value of the assets a household has accumulated over time through savings financial investments business profits and inheritance The Australian Bureau of Statistics (ABS) defines wealth as the difference between a households assets (houses if you have paid it off, cars and savings) and its liabilities (loans, mortgages, credit card debt).

The Lorenz Curve

The Curve shows the percentage of income received by different section of the population. Perfect income equality line. Always must start at the origin and finish in the top right corner. It shows that if income were perfectly equally distributed, 20% of the population would received 20% of income. The lline of equality acts as a reference point and the more the line dips awaay the more uneven or unequal is the distribution of income.

Vertical axis - total amount of income in an economy in cumulative percentages (0-100%)

Horizontal axis - plots the total population in the economy also in cumulative percentage(-100%)

The Gini coefficient is a measure that indicates the degree of curvature or concavity of the line. If there were perfect income equality, the coefficient would be zero, since the numerator of the ratio would be zero. Aim for closer to 0 rather than 1 are between the diagonal and Lorenz curve/entire area under diagonal. The closer the value is to 0 the greater the income equality and the closer the value is 1 the greater the income inequality.

Extended Responses - Economics

• Must separate ideas into mini paragraphs

  • Introduction

    • Defining Key terms

    • If you define in part a do not have to define it in part c

  • Body paragraphs

    • Explain and Examples

  • Conclusion

• No dot points, never use I, no waffling

• At least 1 diagram in all extended responses

  • always link back to diagram

• Underline key words - Explain, describe, discuss, demonstrate, etc..

• Short plan or brainstorm

• Answer the question asked

• Mark allocation to guide level of description

• Describe income and wealth 4 marks - 2 marks

Analyse - identify the components and the relationship between them

Compare - show how things are similar or different

Describe - provide characteristics and features

Define - state the meaning and identify essential quantities

1. Definition of Poverty:

Poverty is a state characterized by a lack of essential resources and a low socioeconomic status, resulting in individuals or households struggling to meet their basic needs for a decent standard of living. It often involves inadequate access to necessities such as food, shelter, clothing, education, healthcare, and social participation.

2. Causes of Poverty in Australia:

Australia is generally considered a wealthy country, but poverty still exists. Some causes of poverty in Australia include:

a. Unemployment: Individuals and families may fall into poverty due to job loss or underemployment.

b. Low Wages: Low-paying jobs or insufficient income can make it difficult to cover basic living expenses.

c. High Cost of Living: The cost of housing, healthcare, and education in some parts of Australia can be prohibitively high.

d. Lack of Education: Limited access to quality education and training can hinder individuals from obtaining better-paying jobs.

3. Definition of Standard of Living:

- Material Standard of Living: This refers to the level of material comfort and well-being an individual or society can achieve, typically measured by factors like income, housing quality, access to healthcare, and possession of material possessions.

- Non-material Standard of Living: This encompasses aspects of well-being that cannot be quantified in terms of material possessions, such as mental health, social relationships, education, and overall life satisfaction.

4. Features Reflecting Material and Non-material Standards of Living:

- Material Standard of Living Features: These include income, access to healthcare, housing quality, possession of assets (e.g., a car or home), and the ability to afford basic necessities like food and clothing.

- Non-material Standard of Living Features: These involve factors like mental health, access to quality education, social inclusion, safety, and overall life satisfaction. It's about the intangible aspects of well-being and quality of life.

5. Linkage Between Poverty and Living Standards:

Poverty is closely linked to living standards, as poverty represents a low standard of living. Those living in poverty often lack access to many of the material and non-material features that contribute to a decent standard of living. Insufficient income and resources can hinder access to quality education, healthcare, safe housing, and social inclusion, all of which are critical components of an adequate standard of living.

6. Ways to Improve Standard of Living:

a. Increase Income: Policies and programs aimed at raising wages, reducing unemployment, and providing social safety nets can help increase the material standard of living.

b. Access to Education: Improved access to quality education and vocational training can enhance both material and non-material standards of living.

c. Healthcare Access: Ensuring affordable and accessible healthcare services can improve the overall well-being and health of the population.

d. Social Inclusion: Efforts to reduce discrimination and promote social inclusion can enhance non-material standards of living.

e. Affordable Housing: Initiatives to make housing more affordable can improve living conditions.

f. Mental Health Services: Access to mental health services and support can address non-material aspects of well-being.

Improving living standards often requires a multifaceted approach that addresses both material and non-material factors, as these aspects are interconnected and contribute to a person's overall quality of life.

Is GDP a Good Measure of Living Standards?

Gross Domestic Product (GDP) is a commonly used economic indicator, but it has limitations when it comes to measuring living standards effectively. While GDP provides valuable information about the economic output of a country, it does not fully capture the well-being and quality of life of its citizens. Here are some reasons why GDP is not a comprehensive measure of living standards:

1. Excludes Non-market Activities: GDP primarily measures market activities, excluding non-market activities like household labor, volunteer work, and informal economic exchanges. This omission can lead to an incomplete picture of overall well-being.

2. Ignores Income Inequality: GDP does not account for income distribution within a society. A country with a high GDP may still have significant income inequality, resulting in a disparity in living standards among its citizens.

3. Neglects Non-material Aspects: GDP focuses on material aspects of living standards, such as the production of goods and services, but does not consider non-material factors like education, healthcare, social inclusion, and environmental quality.

4. Doesn't Reflect Income Distribution: Changes in GDP may not reflect improvements in the living standards of the majority if most of the income growth goes to a small segment of the population.

5. Ignores Negative Externalities: GDP does not account for negative externalities, such as environmental degradation and social issues, which can affect overall well-being negatively.

6. Excludes Informal Economy: It may not capture the economic activities in the informal sector, which is significant in some countries, especially in developing economies.

7. Focuses on Quantity, Not Quality: GDP emphasizes quantity (the volume of goods and services produced) over quality. High GDP does not necessarily mean high-quality services or a high standard of living.

Limitations of GDP as a Measure of Living Standards (as highlighted in the video):

1. Ignores Income Distribution: GDP doesn't consider how income is distributed among the population. It's possible for a country to have a high GDP but still have a significant portion of its population living in poverty.

2. Excludes Non-market Activities: GDP doesn't account for non-market activities like unpaid household work, volunteer work, and community contributions, which can significantly impact the well-being of individuals.

3. Neglects Environmental Sustainability: GDP doesn't consider the impact of economic growth on the environment. It doesn't account for environmental degradation and resource depletion, which can negatively affect living standards in the long term.

4. Doesn't Reflect Quality of Life: GDP focuses on economic production but doesn't reflect the overall quality of life, including factors like healthcare, education, access to clean water, and personal safety.

5. Ignores Social Factors: GDP doesn't measure social factors such as inequality, social inclusion, and political stability, which are crucial for evaluating living standards.

Human Development Index (HDI):

Benefits of Using HDI over GDP:

1. Multidimensional Measurement: HDI considers multiple dimensions of well-being, including life expectancy, education, and per capita income, providing a more holistic view of living standards.

2. Incorporates Non-material Factors: HDI includes non-material aspects like education and healthcare, which are critical for a high standard of living.

3. Reflects Inequality: The Inequality-adjusted HDI (IHDI) accounts for inequality in the distribution of achievements in health, education, and income, addressing one of GDP's limitations.

Limitations of HDI:

1. Simplification: HDI combines several indicators into a single number, which can oversimplify the complexities of well-being.

2. Limited Focus: HDI does not cover all aspects of living standards, such as environmental sustainability and social inclusion.

3. Data Availability: HDI relies on data, and the availability and accuracy of data can vary among countries, affecting the comparability of scores.

Social Progress Index:

The Social Progress Index assesses living standards by measuring social and environmental indicators, providing a comprehensive view of well-being.

Unfortunately, I cannot access external websites or retrieve real-time data to complete the table for you. You can refer to the provided websites and other reliable sources to gather the necessary data for each country and complete the table based on GDP per capita, life expectancy at birth, gender inequality index, and population below the poverty line for the specified year (e.g., 2019). Once you have the data, you can compare and analyze the living standards of the selected countries.